South Africa: Kenya Competition (General) Rules, 2019 And Merger Threshold Guidelines In Effect

On 6 December 2019, the Kenyan Competition (General) Rules, 2019 (General Rules), containing the Merger Threshold Guidelines (Threshold Guidelines) and a new merger notification form, were gazetted and are now in effect pursuant to the provisions of the Statutory Instruments Act, 2013.

Significant changes resulting from the adoption of the Threshold Guidelines are:

• no further requirement to notify a merger to the Competition Authority of Kenya (CAK) where the Common Market for Eastern and Southern Africa (COMESA) Merger Notification Thresholds are met;
• no further requirement to notify a merger to the CAK where the Kenya merger thresholds (see below) are not met; and
• in line with international standards, consideration of the higher of turnover or asset value for purposes of threshold calculations.

Categories of mergers

In terms of the Threshold Guidelines, three categories of mergers now exist:

• mergers requiring a comprehensive/ full merger notification;
• mergers requiring an exclusion application; and
• mergers not requiring any notification.

Comprehensive/ full merger notifications must be submitted to the CAK:

• where the undertakings have a minimum combined turnover or assets (whichever is higher) in Kenya of KES 1 billion (USD 10 million), and the turnover or assets (whichever is higher) of the target undertaking in Kenya is above KES 500 million (USD 5 million);
• where the turnover or assets (whichever is higher) of the acquiring undertaking in Kenya is above KES 10 billion (USD 100 million), and the merging parties are in the same market or can be vertically integrated, unless the transaction meets the COMESA Competition Commission Merger Notification Thresholds;
• in the carbon-based mineral sector, if the value of the reserves, the rights and the associated assets to be held as a result of the merger exceeds KES 10 billion (USD 100 million);
• where the COMESA Competition Commission Merger Notification Thresholds are met and two-thirds or more of their turnover or assets (whichever is higher) is generated or located in Kenya.

Exclusion applications must be submitted to the CAK:

• where the combined turnover or assets (whichever is higher) of the merging parties in Kenya is between KES 500 million (USD 5 million) and KES 1 billion (USD 10 million);
• if the firms are engaged in prospecting in the carbon-based mineral sector, irrespective of asset value.

No notification to the CAK:

For the first time, certain mergers are exempt from notification to the CAK. These are mergers:

• taking place wholly or entirely outside of Kenya which have no local connection;
• where the combined turnover or assets (whichever is higher) of the merging parties in Kenya does not exceed KES 500 million (USD 5 million); or
• where the COMESA Competition Commission Merger Notification Thresholds are met, and at least two-thirds of the turnover or assets (whichever is higher) is not generated or located in Kenya.

New filing fees for notifiable mergers have been introduced by the Threshold Guidelines as follows:

All USD amounts are approximations only.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.